Capital One Financial Corp has barred customers using its credit cards to clear buy-now-pay-later debt as the transactions bear unacceptable risk, it told Reuters, making it the first to distance itself from the finance alternative.
The third-largest U.S. card firm with 62 million accounts, plus more in Canada and Britain, said it would no longer allow"transactions identified as point of sale loans charged on its credit cards, regardless of the point of sale lender"."These kinds of transactions can be risky for customers and the banks that serve them," a spokeswoman said in an email.
The nascent segment is subject to less regulatory scrutiny relative to its traditional consumer credit counterpart where background financial checks are required. BNPL is exempt from consumer credit law in most countries because it does not involve interest and repayments are typically limited to four.
Afterpay set a record AUS$1 billion in U.S. underlying sales in November, over three times the same month a year prior. On Monday, its stock closed at AUS$96.60 from under AUS$9.00 in February, making the firm Australia's 16th largest.
Source: Loan Digest (loandigest.net)